Few small firms petition for unfair trade relief

Wednesday, June 26, 2013

A congressional watchdog agency found that among 56 petitions filed between 2007 and 2012 for relief from unfair trade practices only 21 included at least one small to midsized petitioner.
Small and midsized companies are defined by the Small Business Administration's Office of Advocacy as independent businesses with fewer than 500 employees.
The majority of petitioners had annual sales revenue of at least $10 million. Close to half of the total were in the iron and steel industry. Since participation in the petitions is not mandatory, producers, including small and midsized enterprises, may benefit from a successful petition even if they choose not to join as a petitioner, the Government Accountability Office said.
When petitioning for the imposition of antidumping and countervailing duties, GAO found small and midsized companies faced three key challenges:

High legal costs.

Difficulty obtaining domestic and foreign pricing and production data.

Difficulty demonstrating industry support.

Trade lawyers estimated the cost of pursuing an antidumping or countervailing duty case during the petition and investigation phases can average between $1 million and $2 million and sometimes more, especially if the case involves multiple countries, GAO said.
It is also often difficult for prospective petitioners to obtain domestic and foreign pricing and production data required by the Commerce Department and International Trade Commission regulations and guidance. In addition, it can be difficult for prospective petitioners to demonstrate enough industry support to meet statutory requirements, GAO explained.
GAO noted both Commerce and ITC have offices that provide information and assistance for small and midsized companies to meet some of the administrative requirements and reduce their costs.
Commerce even has the authority to self-initiate an antidumping/countervailing duty investigation without a petition and has used this authority only once since 1991. According to Commerce officials, the department uses this authority only when it has significant participation from the industry. “Self-initiation would likely have little impact on SMEs' overall costs since SMEs incur most costs during the investigation phase. Also, self-initiation could have adverse effects, including raising questions of whether the action was taken consistent with U.S. obligations under international trade agreements,” GAO said.